Note: This column, and the associated video clips, were derived from a presentation from 12 to 200, a Kleiner Perkins conference on growing entrepreneurial businesses, held in Stanford, California on July 16, 2013. This is the third of a three-part series on entrepreneurial management. The first part addressed the concept of “minimally invasive management". Part two covered the key responsibilities of managers, how they get developed and concept of creative friction by Randy Komisar, KPCB Partner.

When you look at an organization, even if you have hired well, even if you are developing your people well, you are still going to end up with three different classes of people: apprentices, journeymen and masters.

Apprentices are people coming in and learning the ropes. They are straight out of school, they’re in a new job, they spend all their time learning the rules. They want to be great at what they do. They read, they talk to their peers, they go to conferences, they try to learn as quickly as possible everything they need to know to do their job well.

The journeymen are the people who perfect the rules. They have been doing it for a while, they are recognized as best practitioners.

The masters, those are the 5%. They know the rules, but they have moved beyond the rules. Those are the people to identify in your organization. Those are the people who can be great managers and leaders. Those are the people who are going to make a difference in the success of your organization. They aren’t simply going to move things along – they are going to change the trajectory of your organization.

Look for the masters. Find the people who forget the rules. Appreciate them. Reward them. And don’t make them managers if that’s not what they need to be. Let them be masters.

I need to come back to topic of firing people.

You can hire as well as you can, you can develop your people strongly, but ultimately you are going to be wrong a bunch of the time. Jobs change. People don’t step up to new roles. Organizations change. You need to understand who is an underperformer and who simply is an incompetent employee.

The difference is between “can” and “can’t.” Managers need to know the difference. There is a lot of cost to getting rid of a B player if they have the competence to be a B+ or even an A player. But if they don’t, you need to resolve that quickly. Organizations regress to the mean. If you have a bunch of B players that are not advancing, your organization will settle to their level.

I’d note that the first people to identify problem employees are their co-workers. You are more often the one reluctant to address the problem. But the cost of inaction is high – if you pretend there is not a problem, the staff will start to lose confidence in you, not just in the person next to them. If you think you’re hiding a performance problem from the team, you are fooling yourself. Identify the problem and act.

The organization will respond in one of two ways when you fire someone. If your organization has been operating with transparency, clear priorities and expectations, they’re going to get it. They’ve been waiting for this to happen. No explanation is necessary. But if you find it is controversial, you have to question if you’ve been doing your job correctly as a manager. Does the staff understand what the expectations are? Do they understand why this person, who may be a friendly and affable B player, is wrong for the organization? Do they understand why the organization needs to operate at a higher level?

Ergo, if you find that terminating becomes a controversial issue, you have to look at whether the company is being managed properly, whether there are clear communications and whether expectations are being set properly.

Adding managers to a flat organization is always difficult. Those first half dozen people you brought in felt like stakeholders. They were involved in every decision. You’re now asking them to pull back, focus more on their work and not be involved in every decision. This involves trust. A great manager has to create that trust with their organization. They have to do it through communication, and predictable and reliable behavior; people need to see that a manager is fair. They don’t always have to agree with them, but they need someone who is fair, and honest, and working hard for the benefit of the staff.

If you see managers fail in an organization, most often it comes down to an issue of trust. People begin to think management is there for their own purpose, rather that of the organization or the team. A breach of trust is a firing offense. It begins to seep into the team’s behavior, productivity and success.

You can build a great organization where you can solve some of these trust problems by sharing information freely. The first time you hire a lawyer, you’re going to be told to to limit what you share with your team. Ignore the lawyer. There is a reason why he’s the lawyer and you are running the company.

You need to show some discretion. You don’t blame people, you don’t denigrate people. If you have a controversial firing, you don’t have to explain how bad the person was, that undermines the organization, because no one is going to trust you when it comes to their own welfare and well-being. But the meta information, what expectations were, what performance was like, what you want from them and the rest of the team, how fairly you dealt with the termination…this is the sort of information you should share freely. People need to feel there is fairness and integrity in the process.

In his book Emotional Intelligence, the author Daniel Goleman cites four essential qualities of a great leader.

One is self-knowledge. If you don’t know yourself well, your biases and your prejudices, if you become a slave to them, then you can’t make the decisions and earn the respect of the organization and give them a sense of fairness and honesty and integrity in the leadership process. You’ve got to know yourself first.

The second is self-regulation. Once you know what your prejudices and biases are, you have a duty to your organization to intervene, to make sure those prejudices and biases are not influencing your decisions and behaviors. You have to be smart enough to anticipate them and get ahead of them.

The third is empathy. If you know yourself well, and neutralize your bad qualities, you will be prepared to empathize with your organization. When somebody walks into your office with what seems like a small problem, you owe it to the organization to understand and appreciate their issue, to see it from their perspective as well as your own.

Empathy is about listening. Listening is the most under-valued skill in an organization. I used to think that when someone walked into my office with a problem, it was my job to solve it. I realized my job was to listen –listening and redeploying them with a sense of empowerment to solve the problem.

The fourth quality Goleman talks about is strong social skills. You have to be a great communicator. To be sure, styles can vary. You can have a boisterous style or a quiet style. But you have to be able to express yourself well to get the following you need in order to motivate your staff and earn their buy in.

Every sunny day, every good day, you’ve got to put money in the back with every individual. To build trust and confidence. Because there’s going to be a rainy day, and you’re going to have to take that bank account down. They have to trust you, they have to believe in you, and they have to have faith in your fairness. They don’t have to agree with you – but they have to understand you and know even if you make a mistake it was not because you were self serving; it was because you felt it was the best decision for the team.

Manager can turn to three kinds of people for advice: Advisors, coaches and mentors.

Advisors are people who give you input. They have experience that may be unique to them that you don’t have, they have information and knowledge you need.

Coaches are people who help you figure out how to do something. It’s not about the input, it’s about the how. While you have many advisors, you probably have one coach at a time. A coach is somebody who works around your particular challenges, your particular strengths and weaknesses, to help you get something done that is critical to your success.

And then there are mentors. Mentors are very special people. They don’t give you information, or tell you how to do something. They are there to help you figure out what to do. Mentors are extremely rare because they unconditionally invest in your success. A coach may tell you how to do your job better; a mentor might tell you to get out of your job.

If you are fortunate enough to find a great mentor, hang on to them. They are invaluable.